The stock market has proven its ability to ride out stormy periods, but when you're in the midst of them, it's easy to lose sight of the long-term picture, panic, and rush to sell your stocks because prices are falling.
While no stock is devoid of risk, and returns are never guaranteed, wonderful companies with superior business models -- and the trajectories to drive long-term growth -- tend to generate favorable share price returns over time.
If you have $1,000 to invest in stocks right now, and a multi-year buy-and-hold period, here are two fantastic companies to consider adding to your basket of stocks and keeping for at least a decade.
1. Airbnb
Airbnb (ABNB 0.10%) continues to accelerate its growth at a rapid clip as the travel recovery boom, combined with long-term evolving travel trends, drives more users and hosts to its platform. Bookings, revenue, and cash flow remain notably elevated from pre-pandemic levels; yet, the number of people staying in Airbnbs is still about 5% below 2019 levels. In short, it's generating more revenue and raking in profits from fewer people.
Even given that fact, the company's revenue of $8.4 billion in 2022 was up 75% on a three-year basis. Nights and experiences booked came in right around 394 million for the 12-month period, up 20% from 2019. Free cash flow, which totaled $3.4 billion for 2022, was up an eye-popping 3,072% from three years ago.
Another intriguing aspect of Airbnb's platform is the way it caters to two key sides of the travel industry: the people hosting stays and the people booking them. And as of the final quarter of 2022, a whopping 36% of Airbnb hosts had actually stayed in a home booked on the platform before.
Management is banking on a variety of trends, from growth in short-term stays to the continued stride of long-term travelers in an ever-flexible world of work, to fuel its growth over the long-term.
More hosts than ever are joining Airbnb, and the company closed out 2022 with a record high 6.6 million active listings. All of these catalysts are bright green flags for Airbnb and its future, and for investors this may be a buying opportunity that begs a second look.
2. Chewy
Chewy (CHWY 1.92%) is continuing to blaze a trail of growth for itself in the multi-billion-dollar pet care industry, a space in which there are multiple large players and significant runway ahead as pet ownership increases. According to the American Pet Products Association, pet owners spent roughly $137 billion on their furry friends in 2022. Roughly $10 billion of that total was attributable to Chewy, with that net sales figure for 2022 representing growth of about 14% from the prior year.
In 2022, Chewy's gross margin jumped 130 basis points from the prior year, while it recorded net income of $50 million. CEO Sumit Singh stated in the company's 2022 earnings call that "delivering long-term profitable growth remains our north star. Over the past four years, we have increased revenues from $3.5 billion to over $10 billion while concurrently expanding gross margins from 20% to 28% and adjusted EBITDA margins from negative 6.5% to positive 3%."
Chewy is building a roadmap for what a full-service pet care business should look like, with products and services that range from pet food and bedding to on-demand telehealth to pet health insurance plans to wellness supplements.
It's also working to reduce operating costs and increase efficiency with the continued buildout of its automated fulfillment center network. Chewy is about to open a fourth automated fulfillment center and is even closing two older non-automated facilities.
The profitability of this business and the strides it's made over the last several years are impressive. It's also worth noting that the pace of U.S. pet spending is expected to hit a valuation of $144 billion in 2023 alone. These are long-term tailwinds that Chewy stands to benefit from, too. Investors looking to add a profitable growth stock to their basket right now shouldn't overlook this pet care giant.
